Rising Deductibles: What Your Wallet Needs to Know

How Deep Are Your Pockets? Examining Changes In Deductibles

Rising insurance deductibles are reshaping how we protect our homes and property – and most people won't notice until they're filing a claim. Timothy Walters pulls back the curtain on this important trend that directly impacts your financial security.

Remember when $500 homeowners insurance deductibles were common? Those days are gone. Now, $2,500 minimum deductibles are becoming standard for most perils, with even higher thresholds – often $5,000 or percentage-based calculations – specifically for wind and hail damage. This shift isn't arbitrary; insurance companies have lost billions on weather-related claims in recent years while development has expanded into previously rural areas.

"If your pockets are like my hairline, they're probably a little bit less full than they used to be," Walters quips, highlighting how inflation compounds the challenge of higher out-of-pocket costs. The changing landscape means consumers need to approach insurance differently than in years past. Gone are the days when insurance could be "fire and forget." Now, regularly reviewing your policy details, particularly deductible amounts, is essential financial hygiene.

Higher deductibles can reduce premium costs, sometimes by hundreds of dollars annually. However, their greater significance often lies in eligibility – some properties simply cannot obtain coverage without accepting higher deductible thresholds. This reality demands greater financial preparation from homeowners, who should maintain sufficient reserves to cover their full deductible amount if disaster strikes. Whether it's homeowners, auto, or health insurance, understanding your deductible is crucial to proper protection.

Ready to review your coverage and ensure you have the right balance of protection and affordability? Call or text 423-417-2070 for a free 20-minute consultation with The Walters Agency team.

To learn more about The Walters Agency visit:
https://www.brightway.com/agencies/tn/knoxville/0237/team
The Walters Agency
7009 Asheville Hwy
Knoxville, TN 37924
423-417-2070

Episode Transcript

Speaker 1 (00:04):
Welcome to the Walters Agency podcast, where
insurance meets peace of mind.
Hosted by licensed insuranceagent and owner, timothy Walters
, we're here to help families,homeowners and small business
owners throughout East Tennesseeprotect what matters most Our
mission creating win-win-winsolutions for insurance.
Let's dive in.

Speaker 2 (00:33):
Rising deductibles could leave you footing more of
the bill than you expect.
Timothy Walters explains what'schanging and what it means for
your wallet.
Welcome back everyone.
Skip Monty here.
Co-host, slash producer.
Back in the studio with TimothyWalters.
Licensed insurance agent andowner of the Walters Agency.
Timothy, how's it going?

Speaker 3 (00:53):
Going well, buddy, how are you doing?

Speaker 2 (00:55):
Doing just fine.
Doing just fine.
A little stressed though aboutmy insurance premiums.
I'm actually doing someshopping around for homeowner's
insurance, and that's on my mind, so I want to ask the question
of our resident expert here,because my pockets aren't deep
how deep are your pockets andwhat are the changes happening

(01:15):
in deductibles?

Speaker 3 (01:17):
Well, I will say, if you're shopping for insurance,
you know a guy.

Speaker 2 (01:21):
That's true.

Speaker 3 (01:24):
Yeah, deductibles.
Deductibles are somethingpeople don't think about until
they're in the middle of a claimusually.
So the question is how deep areyour pockets?
Well, if your pockets are likemy hairline, they're probably a
little bit less full than theyused to be.
Inflation is eating everybody'slunch, which is, of course, one

(01:46):
of the reasons insurance costsmore than it used to.
So deductibles are playing alot more of a role in basically
how people can afford theirinsurance.
Insurance companies, on everylevel, on every product that has
deductibles, are starting to goin the direction of raising the

(02:07):
base level of deductibles.
So a thousand years ago, when Istarted in this business, you
could find homeowners insurancepolicies where the deductible
was $500.
You don't really see thoseanymore.
There's probably still outthere.
I haven't seen one in a verylong time.
They're super rare these days,but I never say never, but I

(02:28):
haven't seen one in a while.
Even $1,000 deductibles arestarting to become a little bit
more rare, and when you can findthem, they are more expensive.
So what I'm seeing these daysis companies moving to flat
$2,500 minimum deductibles forall apparel and then either a

(02:49):
$5,000 deductible for wind andhail damage or a
percentage-based deductible.
So if you look at your insurancepolicy.
A lot of people don't look attheir insurance policies.
You shouldn't.
You look at the deductibles Forhomeowners insurance.
It's typically split into twotypes of losses.
You have your all other apparel, which is, like, you know,
theft, fire, vandalism.

(03:11):
You know, uh, somebody drivingtheir, their car through your
house, which I've seen happen um, you know all that, all that
stuff.
And then you have the wind andhail, which is exactly what it
sounds like.
It's wind and hail.
So tornado comes by, you know,carries your house off to oz if
you get a bad thunderstorm thatrips half of your shingles off.
Uh, that kind of thing is windand hail damage and wind and

(03:35):
hail damage.
The reason that companies aregoing to higher minimum
deductibles, or percentagedeductibles for that, is they
tend to be for one event, themore expensive type of loss.
So you know, the most exposedportions of your house, you know
your outside walls and yourroof are the ones that are
probably gonna be more likely tobe damaged in a major wind or

(03:56):
hail event.
So that's why companies arestarting to increase those
deductibles, because they'relike every other business out
there in the private market Ifthey don't take in more money
than they pay out, then they'regoing to go out of business.
And insurance companies havelost billions and billions of
dollars and went and hailedclaims over the last few years.
So they're trying to figure outways to start mitigating that

(04:18):
loss.
And that's why it's notnefarious.
It's not because insurancecompanies hate their clients.
I've had people say this to me.
It's literally a businessdecision and it is what it is.
You're basically, if you have ahigher deductible.
You know it is what it is.
You know you're, basically, ifyou have a higher deductible,
you just got to keep that inmind and you got to make sure
you have enough money in reserveto help pay that deductible in

(04:40):
the event you do need to file aninsurance claim.
And that's just the reality ofthe situation these days
particularly in this region.

Speaker 2 (04:55):
There's been a lot of well, not just this region but
across the country.
There's been a lot ofsignificant events that I guess
are driving that.
I guess.

Speaker 3 (05:03):
Well, there's more houses.
There's more houses out in themiddle of what used to be
nowhere.
It used to be cow country, nowit's subdivisions, and those are
areas where people didn't usedto notice tornadoes, because if
a couple of cows got lifted away, well, it wasn't that big of a
deal.
But now there's 300 houseswhere that cow field used to be
and if a tornado goes throughthere it's a big deal.

Speaker 2 (05:24):
True, true.
Well, can adjusting mydeductible if I choose to adjust
my deductible higher or lowercan that significantly change my
premium?

Speaker 3 (05:34):
Really depends on what you consider significant.
If you're talking thousands andthousands of dollars, probably
not.
Having a higher deductible cansave you hundreds of dollars,
depending on the type of risk itis and a lot of different
factors.
Right, really, where having ahigher deductible comes in handy
, frankly, is eligibility.

(05:54):
I shop a lot of differentcompanies and I've noticed that
to even have some companies bewilling to offer terms to cover
some properties in certainlocations, they are requiring
higher deductibles.
And the companies that willwrite those same risks with a
lower deductible, they arerequiring higher deductibles.
And the companies that willwrite those same risks with a

(06:15):
lower deductible, they are moreexpensive.
So you know it comes down topeople say, well, I want a less
expensive policy.
Well, starting now and probablygoing on to the foreseeable
future, people are going to haveto really start paying
attention to their deductiblesbecause they may have to get a
policy with a higher deductiblejust to get the coverage they

(06:35):
need to cover their house tosatisfy a lender or just protect
it.
And again it comes back to youknow there is a little bit of
you do got to be responsible foryourself, so you do need to
know what your insurancecoverage you do need to know
what your deductible is and youneed to have a plan on if you
have a $5,000 wind and haildeductible and it's going to
cost you $15,000 to replace yourroof, you need to make sure you

(06:57):
have at least $5,000 in thekitty to help pay that
deductible to replace your roofif there's an eligible roof
claim.
So again, insurance when Ifirst started in this business
was almost kind of fire andforget.
You legitimately could kind ofget a policy and not have to
think about it very often as aclient, not even speaking as an

(07:20):
agent.
But now, like I said, theforces we're looking at in the
market and just with theenvironment that we're in right
now, I do recommend people takea few minutes, especially when
you first get your policy or thenext year when the policy
renews, look at your paperwork,say, hey, what is my deductible?
Did anything change?
What's my coverage?

(07:40):
And if you have an agent, youknow, call your agent and talk
to them.
You know a good agent is goingto be happy to spend, you know,
five or 10 minutes to reviewyour policy, you know, answer
questions or point out thingsthat he or she thinks is
important and deductibles, likeI said, starting in 2023, I'd
say, and moving forward.
I think people definitely needto start paying attention to

(08:03):
what their deductibles are ontheir policies.

Speaker 2 (08:06):
Definitely so.
Are there different deductibleoptions for different types of
insurance?

Speaker 3 (08:15):
Well, yeah, I mean, a deductible is just, you know,
basically you self-insurance,okay, even people who don't have
insurance, I like to say you'restill insuring, you're just
self-insuring, right, right.
So a deductible for ahomeowner's policy or an
automobile insurance policy isjust like a deductible for your
medical insurance.
It's what you have to pay outof pocket if you file a claim.

(08:35):
Okay, so if you have anautomobile policy and you have a
$500 deductible for collisionand you collide with something
on the road and cause, I don'tknow, $2,500 worth of damage to
your vehicle, well that meansyou're going to be responsible
for $500 of that loss and thenthe insurance company will pick

(08:57):
up the tab after that.
Same thing with homeownersinsurance.
You know, if you have a $2,500deductible for all other peril
and you have a fire loss thatcauses $10,000 worth of damage,
well then you're self-insuringfor $2,500 of that loss.
Same thing with medicalinsurance.
You know, if you have a $5,000deductible for your medical

(09:22):
insurance for emergencies andyou go to the emergency room
that's cost $10,000, then you'regoing to be on the hook for
that $5,000 and your insurancepicks up the tab for the rest.
I mean it's the same principleacross all lines of insurance.

Speaker 2 (09:37):
Gotcha.
Well, this has been veryhelpful to me personally and, by
the way, I'll definitely begiving you a call because I know
a guy.
You do know a guy yeah, I knowa guy.
But very helpful informationand a great word of advice to
our listeners is if you don'tknow what your deductibles are,
or if you don't know if they'vechanged or not, call your agent

(09:59):
right.

Speaker 3 (09:59):
Yes, call your agent.
There's lots of great agentsout there and you know, if your
agent doesn't want to talk toyou, you need to find a new
agent.

Speaker 2 (10:07):
Give Tim a call.

Speaker 3 (10:09):
That's right Call me.

Speaker 2 (10:10):
I'll talk to you, that's right.

Speaker 3 (10:12):
More than you want to talk there you go there.

Speaker 2 (10:14):
You go Well, timothy Leavitt.
We'll catch you in the nextepisode.
I hope you have a great rest ofthe day you too.

Speaker 1 (10:23):
All right, man, we'll see you.
That's a wrap on this episodeof the walters agency podcast.
Ready to find the rightcoverage for your home, business
or family?
Call or text 423-417-2070 for afree 20 minute consultation.
Until next time, stay covered,stay protected and keep winning

(10:45):
with the Walters agency.